40 Ind. App. 340 | Ind. Ct. App. | 1907
This was an action instituted by appellant against the Mercantile & Bureau Company, an Indiana corporation, and Joseph R. Cavanagh, Samuel A. Townsend, Joseph B. Gwin, Edward D. Moore, Charles M. McCabe, Frank L. Wayman, and James E. Pierce, for damages.
The complaint is in two paragraphs. Each of said appellees demurred separately to each paragraph of the complaint. Each of said demurrers, except that of the appellee corporation, was sustained. Appellee corporation answered, trial was had, and judgment rendered in favor of appellant against appellee corporation and in favor of appellees against appellant on their demurrers. The question presented in this appeal is upon the ruling of the court in sustaining the demurrers of appellees to the complaint.
The first paragraph of 'the complaint avers that the Mercantile & Bureau Company is an Indiana corporation with an authorized capital stock of $150,000, of which $100,000 was designated as common, and $50,000 as preferred stock; that appellees Cavanagh, Townsend, Moore, McCabe, and Wayman were the incorporators, Pierce a director, and Gwin a stockholder and manager; that none of the capital stock of said company was paid in except that Cavanagh and Townsend assigned to said company certain copyright inventions, and received therefor the whole of the authorized common stock; that at that time said copyright inventions were not of the value of $100,000, but were of little or no value; that all of said officers and managers knew that said copyrights had no value and could have no value until they were perfected and placed on the market and a demand created therefor ; that, for the purpose of raising a fund so to place said copyright articles upon the market, said parties provided for the sale of $50,000, par value, of the preferred stock, at the
The second paragraph of the complaint is substantially the same as the first, except that it is therein averred that appellees agreed together to form a corporation with a capital stock of $100,000 common stock and $50,000 preferred stock; that the $100,000 common stock should be issued to Cavanagh and Townsend for their copyrights, although
The question presented by the claim of appellant involves the construction of §6634, supra, being section six of the statute of frauds enacted in 1852. This section is as fol
The reason for the enactment of this statute is well stated in Cook v. Churchman (1885), 104 Ind. 141, where the court say: ‘ ‘ The statute we are now considering is in all respects the equivalent of what is commonly known as Lord Tenterden’s act. This act was introduced to supply a defect, found to exist in the statute of frauds, which was rendered conspicuous by the decision in Pasley v. Freeman [1789], 3 T. R. 51. Notwithstanding the provision that no action should be maintained whereby to charge another upon any special promise to answer for the debt, default or miscarriage of another, unless the agreement was in writing, signed, etc., the .decision referred to pointed out a mode of evading the statute, by shaping the action so as to make it count upon a tort or wrong by some false or fraudulent representation to the defendant, in order to induce him to contract with another, instead of upon a special promise. The intent and purpose of the statute was to cut off all such actions and to place represenations of the character therein referred to upon the same basis as special promises to answer for the debt of another. ’ ’ To the same effect are the cases of Walker v. Russell (1904), 186 Mass. 69, 71 N. E. 86, and Medbury v. Watson (1843), 6 Met. (Mass.) 246, 39 Am. Dec. 726, where the same statute was under consideration. Prom these authorities it clearly appears that the protection of the statute can only be invoked by those who have made representations of the character, conduct, credit, ability, trade, or dealings of a third party to induce a person to extend credit in some form to such third party.
That the representations incidentally conveyed the impression that the corporation was worthy of credit, since they were to the effect that the corporation had assets,’ was solvent, and was prosperous, etc., does not affect the question. They were not made for such purpose and were not acted upon in such manner. The purpose and effect of the representations were to convince appellant that the preferred stock of said corporation was valuable and a good investment ; and, acting upon the belief thus induced, she made the purchase, to her damage. It is, however, contended by appellees that the purchase of preferred stock in an Indiana corporation is in effect a loan. But this position is untenable.
The case of Cook v. Churchman, supra, is not analogous to this case in any particular, and the general rules therein laid down are not antagonistic in any degree to our holding herein.
Por the foregoing reasons, the judgment is reversed, and the trial court directed to overrule demurrers to the complaint. All concur.